The Microsoft DOS, TiVo and the iPhone. All of these product are commonly agreed as disruptive and game-changing in their respective industries. It’s not difficult to notice that all of them, like most disruptive products in fact, were not created by established players of their industries. With all the resource and power, the establish companies seem to repeatedly fail to conceive and compete with disruptive products. Some of them even go out of business. Most of us point to arrogance, bureaucracies and general incompetent as the reasons of establishes companies’ demise. Research from Clayton Christensen, a professor of the Harvard Business School, reveals just the opposite — establish companies characteristically fail to response to disruptive products because they are well managed, listen to their customers and good at what they do.
Christensen characterizes disruptive products in “The Innovator’s Dilemma” as those that initially under-perform when measured with the existing metrics in the market. Their market are also small and have very lower profit margin at the beginning. They are usually made out of existing components and technologies that are accessible and proven to be reliable.
Big companies habitually invest in what Christensen calls ‘sustaining technologies’, which are improvements of the existing products along the known metrics and reach upmarket for bigger market share and wider product margin. It is therefore illogical for an established company, under constant pressure to maintain growth and support their cost structure, to a conceive product that their customers don’t want, for an small market that offer comparitively miniscure amount of product. In fact, even if a dominant company can create a disruptive product, their customers would reject it because it will not fit their own offerings!
Christensen gives ample samples across a variety of industries to support his argument. He also offers a number of frameworks to help his readers to identify when disruptive product typically emerge, how to monitor shifts in a product cycle, and how an established company can nurture and create disruptive products of their own.
“Innovator’s Dilemma” sheds a much needed light on a subject that has plagued product managers and design planners. It is a recommended read for those who want their companies to stay ahead of their industries, or to create brand new ones.